PathKeeper Financial offers various types of annuities through several different insurance companies. Each product chosen is specific to the client and used to best satisfy the client's financial and income needs.
What is an annuity?
An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and in return obtain regular disbursements beginning either immediately or at some point in the future. The goal of annuities is to provide a steady stream of income during retirement. Funds accrue on a tax-deferred basis, and like 401(k)contributions, can only be withdrawn without penalty after age 59.5.
The contract value of a variable annuity can fluctuate based on the ups and downs of the market. The value is based on the subaccounts of the contract, consisting of stocks, bonds, and money markets. Clients can choose from a wide variety of investments to maximize the potential of long-term capital growth. Variable contracts can include additional riders that allow for a lifetime of income through the rider or through annuitization process. The income riders come at an additional expense to the client. Variable contracts often have surrender periods attached which can trigger penalty charges if money is taken out too early.
In a fixed annuity, a client typically pays an insurance company a lump sum amount of money in exchange for a guaranteed fixed interest rate while also guaranteeing the principal investment. A fixed annuity can be annuitized to provide the annuitant with a guaranteed income payout for a specified term or for life.
An individual invests an amount of money (premium) in return for protection against down markets; the potential for some investment growth, linked to an index (e.g., the S&P 500® Index); and, in some cases, a guaranteed level of lifetime income through optional riders.
Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.